Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201404 
Year of Publication: 
2010
Series/Report no.: 
DIW Discussion Papers No. 987
Version Description: 
Corrected version: September 14, 2010
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
We put forward a modern version of the 'developmental' view of government-owned banks which shows that the combination of information asymmetries and weak institutions creates scope for such banks to play a growth-promoting role. We present new cross-country evidence consistent with our theoretical predictions. Specifically, we show that during 1995-2007 government ownership of banks has been robustly associated with higher long run growth rates. Moreover, we show that previous results suggesting that government ownership of banks is associated with lower long run growth rates are not robust to conditioning on more 'fundamental' determinants of economic growth.
Subjects: 
Public banks
economic growth
quality of governance
regulation
JEL: 
O16
G18
G28
K42
Document Type: 
Working Paper

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